Adjusted Tax Package 2019

On 19 September 2018 we informed you by Tax Alert about the Tax Package 2019 issued by the Dutch government. Today, the Dutch government adjusted the Tax Package 2019 due to strong opposition within Parliament. The controversial abolishment of the Dutch Dividend Withholding Tax will be withdrawn; i.e. the Dutch Dividend Withholding Tax will remain in place. The extra annual tax revenues of approximately EUR 2bn will be reinvested in the Dutch economy to strengthen the attractiveness of the Netherlands as a country of investment. In the below Adjusted Tax Package 2019 you will find a summary of the most notable changes of the Tax Package 2019 that are relevant for Dutch subsidiaries of Japanese MNC’s. Please note that the House of Representatives and the Senate have to approve these changes, before implementation, and that the proposals may be changed during the legislative process.

1. Corporate Income Tax Rate
Under the Adjusted Tax Package 2019, the corporate income tax rate will be decreased to 20.5% (was 22.25%) per 2021 with a step-up rate of 15% (was 16%) for the first EUR 200,000 of taxable profits. The decrease of the tax rate will take place in steps:

for book years starting on or after 1 January 2019, a 25% (was 24.3%) corporate income tax rate will (continue) to apply (with a step-up rate of 19%);

for book years starting on or after 1 January 2020 the exact steps of the reduction have not yet been published.

2. Depreciation Buildings in own use
Under the Adjusted Tax Package 2019 transitional rules will be introduced to soften the impact of the proposed limitation of depreciation of buildings where the book value of buildings may not be less than 100% of the WOZ value. Under these transitional rules, buildings which are in own use before 1 January 2019 and which have been depreciated for less than 3 years may be depreciated during these three years where the book value of buildings may not be less than 50% of the WOZ value.

3. Dividend withholding tax
The Dutch government has decided to maintain the Dutch dividend withholding tax, whereas this was initially supposed to be abolished under the Tax Package 2019. The proposed (new) dividend withholding tax under the Tax Package 2019 will be integrated with the existing Dutch dividend withholding tax at a later stage.

4. 30% facility
In the Tax Package 2019 it was announced that the term of the 30% facility of 8 years was reduced to 5 years without transitional provisions. In the Adjusted Tax Package 2019 it has been proposed that such transitional provisions will be introduced for those 30% facility arrangements which will end in 2019 or 2020.

Should you have any further questions regarding the subjects discussed in this Tax Alert, please do not hesitate to contact Roger Brands (rbrands@deloitte.nl), Taik Fuchten (tfuchten@deloitte.nl) or Tom Bijkerk (tbijkerk@deloitte.nl). If you wish to discuss this Tax Alert with a Japanese speaking professional, please contact Taichi Murakami (TMurakami@deloitte.nl).